Gov. Brown Signs Payroll Bill Supported by MPAA, SAG

California law now preserves production companies’ ability to have payroll firms handle insurance, tax and other responsibilities

Last Updated: August 3, 2011 @ 3:49 PM

Gov. Jerry Brown on Wednesday signed a law that lets production companies hire payroll firms to handle obligations such as paying taxes, union dues, workers compensation and insurance.

The Motion Picture Assn. of America, the Screen Actors Guild and Entertainment Partners supported the law, which passed the state Senate 37-0 and the state Assembly 73-0.

Assemblyman Mike Gatto (right), a Democrat from Los Angeles, sponsored the bill, calling payroll companies "crucial to the entertainment industry."

Production companies often form specifically to make single projects. When those projects are complete, the production companies shut down.

Payroll companies "take on many of the legal obligations which production companies would otherwise perform, and which employers in other industries perform in the regular course of their business," according to a statement from Gatto's office.

The assemblyman told TheWrap that "it's very important for below-the-line workers because they have an entity that continues to exist after a production has ended, and if they have any questions about healthcare or workers comp or unemployment, this is the entity they can deal with."

For producers, he said, the payroll companies "tell the producers who is union, who is not, what wages have to be paid, when you have to start overtime, when you have to give them a break."

A law that allowed the companies to handle these responsibilities — and let the payroll companies act as "employer of record" — was set to expire on Jan. 1, 2012. It now has no expiration date.